BANKING
Mortgage rates fall to their lowest in almost three months
High street lenders are slashing mortgage rates with HSBC reducing rates on 100 of its deals by up to 0.1 percentage points on Tuesday. Yorkshire Building Society cut its fixed-rate mortgages by up to 0.75 percentage points while Santander also slashed some of its fixed-rate mortgages by up to 0.59 percentage points. The bank also launched a new two-year deal at 4.84%, one of the cheapest on the market. Borrowing costs rose dramatically after the mini-Budget at the end of September, peaking towards the end of October, before gradually falling to today’s three-month low. The average two-year fixed rate now stands at 5.58%, down from its peak of 6.65%, while the average five-year rate has dropped to 5.39%, the lowest level since the start of October, when it was priced at 5.23%.
INTERNATIONAL
Wealth management revenues prop up Morgan Stanley
Rising interest rates and fears over the health of the US economy contributed to a 41% fall in fourth quarter profits at Morgan Stanley, the Wall Street bank said on Tuesday. Investment banking revenues fell 49% year on year to $1.25bn, in line with expectations, but revenues in wealth management were up 6% to more than $6.6bn. Investment management revenues fell 17% to $1.5bn but topped analyst estimates of $1.3bn. Morgan Stanley shares were up more than 7% in morning trading with investors optimistic about the bank’s efforts to diversify into wealth and asset management.
Goldman Sachs’ profits plunge two-thirds as dealmaking slumps
Goldman Sachs reported its fifth straight quarter of falling profits on Tuesday recording a drop in net income to $1.3bn, short of analysts’ expectations of $2.2bn and down from $3.9bn in the same period last year. The bank reported a plunge in investment banking revenue as dealmakers faced a sharp drop in their businesses in 2022. However, Goldman’s net income for the full year was $11.3bn, its second-best performance since 2009. “Simply said, our quarter was disappointing and our business mix proved particularly challenging,” Goldman chief executive David Solomon told investors. Shares in Goldman fell almost 8%.
Banks’ net zero pledges not credible, critics say
Data compiled by the pressure group Reclaim Finance show banks that signed up to Mark Carney’s net zero initiative are still investing heavily in fossil fuels. The Glasgow Financial Alliance for Net Zero (GFANZ) programme, launched by the former Bank of England governor in 2021, persuaded some 450 organisations to agree to align their investments with the Paris climate goals. However, Reclaim Finance says its members have poured hundreds of billions into fossil fuels since then. Paddy McCully, senior analyst at Reclaim Finance, said: “GFANZ members are acting as climate arsonists….GFANZ and its member alliances will only be credible once they up their game and insist that their members help bring a rapid end to the era of coal, oil and fossil gas expansion.”
Fed wants climate risk analysis from largest U.S. banks
The Federal Reserve has asked the biggest banks in the US to report by the end of July on how their businesses would be impacted by "a range of plausible future outcomes" related to climate change and the transition to a lower-carbon economy. The analysis is meant to "build understanding of how certain climate-related financial risks could manifest" in terms of changes in the likelihood of loan defaults, losses, and internal risk assessments. "The Fed has narrow, but important, responsibilities regarding climate-related financial risks - to ensure that banks understand and manage their material risks, including the financial risks from climate change," Fed Vice Chair for Supervision Michael Barr said in a statement.
US bank Silvergate sinks to $1bn loss as crypto crisis takes a toll
Silvergate, the US crypto-focused bank, swung to a $1bn loss in the final quarter of 2022, underling how the lender has been hit by the collapse of crypto prices and implosion of exchange FTX.
FINANCIAL SERVICES
Chief legal officer quits LME
Tom Hine is stepping down as general counsel for the London Metal Exchange this month after 17 years. The move comes after LME chair Gay Huey Evans announced two weeks ago that she would be departing and the publication of Oliver Wyman’s scathing report into the exchange’s handling of the nickel crisis. LME's decision to cancel billions of dollars of trades after a spike in the nickel price in March is being investigated by the Financial Conduct Authority and the Prudential Regulation Authority.
Wise shares fall as transfer volumes drop in last quarter of 2022
Payments company Wise saw its shares fall sharply on Tuesday after the value of cross-border transfers fell to £26.4bn in the final three months of 2022, down 2% on the previous quarter.
MEDIA & ENTERTAINMENT
Disney attacks Peltz’s media expertise in proxy fight
Walt Disney has defended its decision to deny activist investor Nelson Peltz a seat on its board, arguing that he “lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem.” Peltz’s Trian Partners owns a $900m stake in Disney and has criticised the company’s aggressive strategy of mergers and acquisitions, arguing that the entertainment group’s costs have spiralled.
SPORT
Sir Jim Ratcliffe confirms interest in buying Manchester United
One of Britain's richest men has confirmed his interest in buying Manchester United. Sir Jim Ratcliffe, the boss of chemicals company Ineos, has reportedly been a life-long supporter of the club. Ineos announced it had formally lodged interest with the club's American owners, the Glazer family.
ECONOMY
UK wages jump but fail to keep pace with inflation
Figures from the Office of National Statistics reveal UK pay increased by 6.4% between September to November 2022, both including and excluding bonuses. However, in real terms adjusted for inflation, total and regular pay both fell by 2.6% over the year, marking one of the biggest falls in living standards since comparable records began in 2001. Wage growth was much stronger in the private sector than in the public sector - 7.2% compared with 3.3% - a gap that will likely fuel the stand-off between the Government and striking public sector workers. Economists said the acceleration in wage growth would strengthen the case for further interest rate rises, with traders pricing in a higher probability of a 0.5 percentage point increase after the data was released. “At the moment, the jobs market is too strong for comfort for the Bank of England,” said Sandra Horsfield, economist at Investec. She added: “The worry is that, if wage growth exceeds productivity gains, firms may seek to pass on some of these extra costs…prolonging the bout of inflation.” Meanwhile, the rate of UK unemployment rose to 3.7% in the three months leading up to November, up from 3.5% in the previous three-month period, the ONS said.